Nightmare in northeast China: why investors still tread warily in the country’s rust belt
- One businessman’s long and costly legal battle with the city authorities who once wooed him highlights the perils of doing business in this part of China
When Lan Weiguang first invested in the northeastern Chinese city of Siping in 2006, he was welcomed by the city mayor with open arms.
But 13 years later the scientist-turned-businessman is desperate to get out after his multimillion dollar investment plunged him into a “long nightmare” that led to a prolonged battle with the city authorities, whom he accused of “gross unfairness” and illegal behaviour.
The 55-year-old entrepreneur is one of the many overseas Chinese businessmen who have had their fingers burnt in northeastern China, a traditional stronghold for heavy and state-owned industries.
Although it has long been criticised for its unfriendly business environment, bureaucracy and discrimination against private enterprises, some overseas investors have been willing to take the risk only to find their worst fears have come to pass.
A couple of years ago, Zhang Guobao, a former deputy director of the National Development and Reform Commission, told a seminar in Harbin that the scale of the problem had been brought home to him after he saw some foreign investors reduced to tears when they were forced to abandon their businesses and leave the region.
He also cited cases such as that of Liu Xiucai, a chemist from the University of Wisconsin-Milwaukee, who lost a fortune in Shandong province in 2010 after his patented technology to make lubricants and diabetes drugs from wax was allegedly stolen by a state-owned company and another investment he made in Jilin province went south three years later.